To Motivate, Better to Take Away Than to Give
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Oct 7, 2013

To Motivate, Better to Take Away Than to Give

The right way to frame incentives

Based on the research of

Kelly Goldsmith

Ravi Dhar

Listening: Interview with Kelly Goldsmith on Motivating Employees
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Nothing in the world is worth having or worth doing unless it means effort, pain, difficulty. So said Theodore Roosevelt, who would know a little something about achieving goals. But our motivation to work for goals is not steadfast: it can wax and wane depending upon factors both psychological (a bad mood) and environmental (nearby construction work). Determining how to enhance task motivation, therefore, remains a significant pursuit for both researchers and managers alike.

“All kinds of disciplines are involved in this work, because, throughout the history of humankind, we’ve always had goals and wanted to achieve them,” says Kelly Goldsmith, an assistant professor of marketing at the Kellogg School of Management. “But achieving those goals is difficult, so we take a step back and say, ‘What can we do to make meeting that goal more likely?’”

Finding a motivational sweet spot requires providing people with effective incentives, Goldsmith explains. She and her colleagues divide incentive framing—that is, how incentives are presented to a person—into two categories: positive and negative. A manager can promise an employee an end-of-the-year bonus if she works hard (positive incentive framing), or warn the employee that an allotted bonus will be cut if she does not work hard (negative incentive framing). Which, though, is the most effective method of getting the employee to do her work? Precisely the opposite of what most firms are doing, according to Goldsmith.

Motivated to Do the Impossible

Previous research indicates that people tend to experience losses more intensely than they do gains. “For example, if a $20 bill falls out of your pocket, it hurts more than the happiness of finding $20 on the ground feels good,” Goldsmith explains. So she and Ravi Dhar, a professor at Yale University, decided to “take what we know about the impactful nature of losses, and translate it into the domain of motivation.”

In a recent paper, Goldsmith and Dhar designed a series of simple, related experiments. In the first, they recruited a group of 62 undergraduate students. They told half the students they would receive a quarter each time they correctly solved puzzles in which strings of letters could be rearranged to form words. The remaining students received $1.50 and were told that they would lose a quarter each time they failed to solve a puzzle. The researchers intended for two of those anagrams—FABELY (“labefy”) and UDARIVMIQU (“quadrivium”)—to be unsolvable.

Both groups of students, on average, solved the same number of anagrams. However, the negative-framed group spent more than five minutes longer trying to complete the puzzles—presumably dwelling on the unsolvable ones—than their quarter-collecting counterparts. In other words, the negative-framed incentives were more effective at motivating the undergraduates.

In a second study, the researchers recruited hundreds of individuals across a wide range of ages from Amazon’s Mechanical Turk online participant pool. As before, participants solved anagrams, some of which were unsolvable, with half the participants allocated money upfront and threatened with losing it, and the rest working to gain the money. Once again, the negative-framed incentives proved more effective than the positive-framed ones.

Age Matters; Our Predictions Do Not

When Goldsmith and Dhar looked closer, however, they found that age played a critical role in the effectiveness of negatively framed incentives. “Younger people” (those 35 and under) were more motivated by negatively framed incentives than positively framed incentives—by far. Among “older people” (those 36 and older), however, positively framed incentives became more motivating. In fact, they were equally as motivating as negatively framed incentives.

This suggests that what motivates us may change across the lifespan, an idea in line with past research suggesting that with age we focus more on positive information and less on negative information. Researchers have speculated that this shift in perspective has evolutionary origins. When we are younger, attending to negative information, such as threats in the environment, may be critical for survival. As a consequence, younger people are more likely to notice and remember negative objects and events. As we age, however, this need for survival changes. Researchers have found that among elderly individuals, it is the good things in life that are noticed quicker and remembered longer. Goldsmith suspects that this shift in focus from the negative to the positive is what explains why positively framed incentives become more effective over time.

“People were bad at predicting what motivates them.” — Kelly Goldsmith

Additionally, Goldsmith and Dhar were surprised to find that we seem to have no idea what best motivates us. In two other experiments conducted with new groups of undergraduates, the researchers gave students surveys presenting scenarios based on the previous experiments. One scenario described solving puzzles and receiving money for each correct answer, while another described losing money for every puzzle left unsolved. Some students ranked how motivating they found the two scenarios, while others predicted how much they would enjoy them.

The vast majority of students predicted that they would enjoy positive incentives more than negative ones. They also predicted that they would be more motivated by positive incentives—though they were in fact of an age group that responds best to negative incentives. These results indicate that many of us rely upon the intuitive but sometimes erroneous assumption that when we are working toward something good we are more motivated than when we are working to avoid something bad, Goldsmith explains. “The finding was straightforward: people”—at least in this instance—“were bad at predicting what motivates them,” she continues. “We thought this was the most interesting part of our study.”

Lessons for Managers—and the Rest of Us

The real-world applications of these various findings are numerous, Goldsmith says. A professor, for example, could divvy out extra credit points for students at the start of the semester and then threaten to take away one point for every assignment the students do not manage to complete outside of class. “Maybe I’ll do this in the spring, allocate some extra credit to my students—they’re just the right age—and see what happens,” Goldsmith says.

Firms could adopt a similar strategy, assigning optional tasks for “extra credit money” and adjusting the incentive framing according to the median age of its employees. Goldsmith warns, however, that her experiments involved only small amounts of money, not an employee’s entire bonus or salary. There is a chance that people will not respond to negative incentive framing for larger sums of money—or for that matter over longer periods of time.

Still, says Goldsmith, firms use positively framed incentives all of the time, but negatively framed incentives only rarely, even though the prospect of losing something is far more motivating than the prospect of gaining something, especially among younger employees. This suggests that perhaps managers should not trust their own intuitions about what will motivate their employees.

Individuals striving to meet a personal goal should keep their own limits in mind, too. Says Goldsmith, “It’s important to know if we’re prone to error when predicting our own motivations.”

Featured Faculty

Member of the Department of Marketing faculty until 2017

About the Writer
Rachel Nuwer is a freelance science journalist who contributes to venues such as The New York Times, Scientific American and Smithsonian. She lives in Brooklyn.
About the Research

Goldsmith, Kelly and Ravi Dhar. In press. “Negativity Bias and Task Motivation: Testing the Effectiveness of Positively versus Negatively Framed Incentives.” Journal of Experimental Psychology: Applied.

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